Wednesday, April 30, 2008

Although I've never formally quantified it, life insurance comprises about 40% of my practice. Two recent experiences with this fairly simple product have left me disappointed and angry.

First, in some 25 years "in the biz," I've helped many clients file death claims on loved ones. For the most part, it's a pretty simple process: call the carrier to report the death, confirm mailing information, wait a couple days for the forms to arrive, and on from there.

After my mother died a few weeks ago, it took a while for me to feel up to starting the claims process. A week, in fact. So last Wednesday, I called the three carriers with whom Mom was insured, and asked them to send the paperwork. We confirmed mailing info, and that was that. Two days later, I received the package from Western-Southern Life.

This is not a complicated process: once the carrier's confirmed the mailing address, they drop the forms in the mail. It doesn't take a week for the envelope to arrive; in fact, I received the W-S one in two days.

Life insurance is a promise to pay, and we trust the carriers to at least get the easy parts right. Neither General American nor TransAmerica seem capable of doing so, and I won't take the chance that they'll disappoint my clients, so I will no longer be selling their products.

At the other end of the life insurance process, I'm beginning to change my mind about how I handle applications. I always have the client fill out the app itself, with guidance from me so that they know which parts to answer and which to skip. One question that has always bothered me, and which I now find completely unacceptable, is the one regarding family history. It's not that the information is irrelevant (it may well be), but it is a fundamentally unfair and flawed underwriting tool.

How so?

If I'm adopted, then I have no idea whether my father died at age 47 of acute liver failure, or remains a robust 97 year old golfer. And if I happen to know that my mother died of leukemia at age 37, there's absolutely no way the underwriter (or claims person) could ever know this. While I will never suggest that a client lie on an application, I think that I will now point out this problem to my clients, and suggest that they answer however they deem appropriate, keeping in mind that, unlike the medical questions which can be checked, the family history is completely unavailable to the insurer.

'Nuff said.

ADDENDUM: Although I've blogged on this subject before, I think it takes on new relevance in light of the recently passed legislation regarding "genetics discrimination." Although that bill seems to focus only on health insurance, it doesn't seem to me to be much of a stretch to apply it to the life side.

So not only is it a fundamentally stupid question, it may well now be illegal.

If given a choice between a lobster meal for $30 and one for $3, most folks would naturally ask, what is wrong with the $3 meal?

Or gasoline for $3.50 a gallon vs. gasoline for $0.35 per gallon.

Or . . .

Well, you get the idea.

When faced with choices, the lower priced product, especially if it is dramatically lower, causes most of us to ask . . . "what's the catch".

Apparently not so with health insurance.

Lisa Kelly has leukemia.

She also has a limited benefit plan purchased through AARP.

Lisa was referred by her doctor to M. D. Anderson hospital in Houston for treatment, but when she arrived "the nonprofit hospital refused to accept Mrs. Kelly's limited insurance. It asked for $105,000 in cash before it would admit her."

Limited insurance.

Low premium, limited insurance.

Should be a tip off.

Unlike many without insurance, or limited benefit plans, Mrs. Kelly has assets. She and her husband have real estate holdings and other investments.

They are not destitute. They could have afforded more comprehensive coverage but they opted for a plan with a very low limit.

Typically, hospitals have billed people after they receive care. But now, pointing to their burgeoning bad-debt and charity-care costs, hospitals are asking patients for money before they get treated.

Hospitals say they have turned to the practice because of a spike in patients who don't pay their bills. Uncompensated care cost the hospital industry $31.2 billion in 2006, up 44% from $21.6 billion in 2000, according to the American Hospital Association.

School pictures typically have signs that say, no cash, no flash. But hospitals (and other care givers) have typically billed in arrears.

Those days are over.

It is one thing to stiff the photographer for $100 worth of senior class pictures. Another to stiff a hospital for $100k or so.

Asking patients to pay after they've received treatment is "like asking someone to pay for the car after they've driven off the lot," says John Tietjen, vice president for patient financial services at M.D. Anderson. "The time that the patient is most receptive is before the care is delivered."

Good analogy.

Hospitals are a business.

The article, and many bloggers, have chosen to blame the insurance carriers, or the health care system, for Lisa Kelly's plight. But the fact is, she made a choice, and that choice was to buy a limited benefit plan because "at the time, she hardly ever went to the doctor. "I just thought I needed some kind of insurance policy because you never know what's going to happen," says Mrs. Kelly."

This kind of rationale, assuming that because you have had good health in the past all you need is a "good health policy", is convoluted.

My house has never burned down, so why do I need a policy that covers replacement? Why not just buy one that covers the gutters, paint and roof?

No one would ever do that but they do buy limited benefit plans every day. They are great until you need them then they are almost worthless.

According to the article, the Kelly's have gone through roughly $45,000 of their own money and are still on the hook for $145,000 at this point.

The Kelly's are self employed. Why didn't they purchase a small group plan rather than going through their own money?

Individual carriers would turn her down in a heartbeat, but most states (and TX is one of them) have small group laws. In most cases, carriers are required to issue coverage (including for pre-ex conditions) when the policy is a group plan.

Texas also has a risk pool that is supported in part by taxes. That is another possible option.

For whatever reason, the Kelly's are using their own funds because of poor choices in the past.

Making better choices before she got sick would have left them in better financial shape.

Making better choices after she got sick would also have left them in better financial shape.

But too often for Massachusetts workers on limited incomes, an unexpected illness is not enough of an excuse to stay home, according to some lawmakers.

That could all change under a new law being pushed on Beacon Hill that would require all employers in the state to grant their employees at least seven paid sick days a year to be used for themselves or for the care of a child, spouse or parent.

Sick days for every one.

But who pays?

The employer.

"We don't think the Legislature should be mandating what types of benefits employers should be providing to their employees," said Richard Lord, president of Associated Industries of Massachusetts. "That decision is best left to the employer and what they can afford and what they need to attract workers."

We've covered the subject of medical tourism pretty heavily over the years; folks from the US take advantage of it, of course, but so do folks from countries with "universal care," believe it or not.

One downside has been the cost: although many procedures are less expensive overseas (even factoring in travel and lodging costs), many folks aren't really able to pre-figure the total expense, or know how to coordinate all the many facets. And insurance companies haven't exactly been lining up to help their insured with these arrangements.

That may be changing:

"Members now have the ability to receive high-quality medical care overseas at a fraction of the U.S. cost! If you need a hip replacement, knee replacement, arterial bypass or other procedure, Companion Global Healthcare will assist you."

[ed: There's no link to the quote because it's from an email I received from the carrier, not copied from a website]

Folks who are insured with Companion Life will now have access to coordinated care, including surgical services, travel arrangements, transfer services from airports to hospital, even passports and visas, as well as scheduling of the care itself. While this certainly isn't an insured expense, it marks the first time I've seen such an effort by a US insurer. If there's a downside to the plan, it's that the carrier offers only limited benefit (not major medical) plans.

The Associated Press has caught up with a "little-noticed investigation" of the U.S. military's health insurance program in the Philippines, where some veterans have teamed up with doctors, hospitals and clinics to swindle more than $100 million through phony claims.

Little noticed investigation.

Curious wording. Who failed to notice $100M in missing money?

"There just seemed to be so many possibilities for abuse of the system, and there were so few controls in terms of monitoring," said former U.S. Attorney Peg Lautenschlager, who oversaw prosecutions in the late 1990s.

So many possibilities for abuse.

So few controls.

This is comforting.

A Pentagon spokesman for Tricare told AP the fraud has been hard to prove because of language barriers, a lack of cooperation from providers and limited law enforcement resources. He said that controls have been added and that Tricare is working to stop fraud.

Operations are being cancelled because of dirty or broken instruments sent back by private companies employed to clean them, the Royal College of Surgeons (RCS) said yesterday.

Hospitals used to sterilise their operating instruments on site but are being encouraged by the Department of Health to put the job out to private companies.

A survey of surgeons found that equipment was often unfit for use, damaged, or late - meaning that operations were cancelled at the last minute, often when patients were already anaesthetised.

There's nothing inherently wrong with using outside contractors, but there's always the assumption that the job will be done correctly. From cleaning the hospitals to sterilizing their instruments, it's bizarre how many times the UK health system messes up. Is there a cultural lack of personal responsibility? It's like the Chinese manufacturers that put antifreeze in toothpaste to save a buck. It's just stupid.

For some reason there seems to be an uproar of contempt for those who have "done well" by societal standards. The MSM and politicians alike want to stress the difference in the "privileged" class vs. the poor.

This is especially true when it comes to health care.

Those who have the ability to pay receive better care and therein lies the rub.

"Private patients who spend two or three thousand dollars a year for private health insurance which gives them the means to access a world-class private hospital system are being promoted at the expense of the majority in the community - the 57% who are uninsured who are totally reliant on the public hospital system for access for much needed treatment," he said

Private patients, who are willing to pay extra for their care, are being tarred and feathered.

Shocking.

Dr Coglin said it was "scandalous" that private patients were "blocking the beds" in public hospitals when 38,000 people were waiting for treatment. "The 57% of Victorians that don't have private health insurance have no choice but to wait in the queue for access to the public hospital beds - it's inequitable," he said.

Inequitable.

And how is this for a defense?

"Private hospitals don't offer the range of procedures that can be undertaken in public hospitals and some privately insured patients have to be treated in the public system," he said.

Monday, April 28, 2008

Some of our regular readers may recall a piece we did way back in 2006 about the uninsured. This particular piece involved a man (Carlos Ferlini) who was injured in a fall while replacing gutters on a home in California.

We were commenting on (reacting to) a story by 60 Minutes about the "plight" of the uninsured in America.

Since that post appeared, we have been in semi-regular contact with the homeowner. It seems that Mr. Ferlini, through his attorney, have sought retribution through the courts to recover at least a portion of Mr. Ferlini's financial loss.

The case is still being litigated, so we are not at liberty to disclose most of the particulars. But here are some facts that are public knowledge via the media and public court documents.

Mr. Ferlini was self employed as one who installs and repairs gutters.

At the time of his injury, Mr. Ferlini claimed to earn "about $50,000" per year.

Mr. Ferlini did not have workers comp or health insurance at the time of the accident. Nor was he licensed to perform the kind of work he was doing.

Mr. Ferlini incurred almost $250,000 in billed charges after he fell off the roof while attempting repairs.

Mr. Ferlini has sued the homeowner and the homeowners insurance carrier for $450,000. The case is in litigation and has not (yet) gone to trial.

Did I mention that Mr. Ferlini is in the United States as an illegal alien?

Politics is almost always the lead story in national news, and a perennial hot topic is health care and health insurance. The American Cancer Society has decided to jump in the fray and pitch the need for universal health insurance. They do so by airing stories like this about Mark Windsor who has cancer.

"If I probably had gotten some good treatment several years ago I probably would have been cured," Windsor said from his home in Atlanta, Georgia.

The reason he didn't get care sooner -- he couldn't afford it, because he didn't have insurance.

Mark was diagnosed with a rare cancer 25 years ago at age 27. The article does not state if he had insurance at the time, or any time prior to a few years ago when he married a woman who had health insurance and could cover him under her plan.

By the time he picked up health insurance his cancer had progressed to the point of being essentially untreatable.

Mr. Windsor and the American Cancer Society want to blame health insurance carriers for Mr. Windsor's plight. No one wants to look at the options that WERE avaialable, including health insurance through an employer plan.

And what about his wife, Val?

"We're going through a divorce," he said. "Because I have so many hospital bills now, insurance companies have denied to pay them...so I've done what I think is proper, filed for divorce, so that my wife is not stuck with my hospital bills."

Well that's a bit disingenuous.

Carriers can't simply deny claims simply because there are so many of them. But the casual reader would imply that carriers are run by folks who delight in denying legitimate claims.

Karen Ignani, president and CEO of America's Health Insurance Plans, says the organization would like to see all Americans covered. "Anytime anyone falls through the cracks, this is a major societal, national problem.

Portraying Mr. Windsor as a victim is an insult. There are always options including taxpayer funded plans (like Medicaid), employer group health plans and, in many states, risk pools. At one point in the article Mr. Windsor states he earned too much ($30,000) to qualify for Medicaid. As a self employed individual, Mr. Windsor controls how much (or how little) he earns each year, but it is much easier to blame the carriers and the "system" for his plight.

In other words, round up all the usual suspects and throw personal responsibility out the window.

Saturday, April 26, 2008

Back in the day, home stereos came in huge wooden cabinets, as much furniture as sound system. Their appeal was obvious: rich sound without dangling wires, all neatly packaged together. The downside wasn't so obvious until the tuner knob or turntable arm broke: the whole thing went to the shop for repairs, leaving only the sounds of silence.

Then came components: speakers, turntables, tuners and tape decks all separate, easily upgradeable and if the speaker blew, it was a simple matter to swap in a new one.

Several months ago, when I had my little lesson in the effects of ice and gravity, the provider I chose was such a facility: a dozen or so state-of-the-art exam cubicles, but no hospital rooms. For a relatively minor injury such as mine, this was ideal: there was little chance I'd need overnight accomodations.

We've talked before about minute-clinics and surgi-centers, and how many urban hospitals are cutting back on services, and I think I see a trend: much as stereo cabinets gave way to hi-fi components, it seems to me that previously hospital-based care is moving more and more to out-patient facilities unconnected to the sprawling complexes we've come to know as "hospitals."

Is this a "good thing?"

Only time will tell, of course, but I think the trend is encouraging. Specialty facilities can offer more expert care more quickly, and (perhaps) more cost-efficiently than traditional hospitals. They lack, of course, extended stay options; when my mother was recently hospitalized, she was taken first to the same facility as I had been, but had to be transported later that day to a "regular" hospital. Still, we couldn't have known that at the time, and it seemed a reasonable choice.

Friday, April 25, 2008

A few nights ago my wife and I were enjoying a DVD movie in the den and having a snack which included a mid priced, but flavorful Merlot. Something happened, I don't recall what, but Rachel spilled her glass of wine on the oriental rug.

Actually, when we bought it years ago it was an oriental rug. I suppose today it would be an Asian-American rug.

The rug is probably 30 years old. We vacuum it on a regular basis and have had it professionally cleaned a few times for a small fortune.

Through almost 30 years, two kids, dogs and even a few escaped gerbil's the rug has survived.

Now I was envisioning our treasure that was ruined by a glass of wine.

Deep red really stands out against a cream colored background with sprinkles of blue, green and a touch of red.

The folks at Stanley Steemer do an outstanding job on carpet but I figured this was beyond them. I will probably have to find an Asian-American rug doctor to fix this. I will pay a king's ransom to have the spot removed.

Wouldn't it be nice if we had a copay?

You know. Pay someone of Asian or Middle Eastern descent $20 to fix my rug? How cool is that?

But having such a copay plan would probably be cost prohibitive. I mean, how many times do you spill red wine on a rug while watching Bullitt?

Since I did not have a carpet cleaning copay, I did the next best thing. Thanks to Al Gore, I have the internet.

Seems we don't need a copay, or even someone with a foreign accent to clean the spot. All we needed was some hydrogen peroxide and Dawn dish washing detergent.

Thursday, April 24, 2008

Health insurance carriers, in an attempt to limit premium increases, are introducing a 4th tier to prescription drug benefits. These are usually reserved for the most expensive drugs, typically used to treat cancer patients.

Almost always the 4th tier is for infusion therapy which can easily run $4,000 per treatment.

Some 4th tier copays run $100 while others require coinsurance. With coinsurance the insured will typically pay 20 - 25% of the cost of the medication up to a maximum of $2500 per year.

Tier 4 coverage is exposing more US citizens with health insurance to illness-related financial risk. For some people, this may be tempered by out-of-pocket maximum co-payment limits, but according to the EHBS, only 8% of covered workers have an out-of-pocket spending maximum on prescription drugs.

This point is valid.

Perhaps that is because the majority of insureds have Rx copay plans that never set a cap on the number of copays you can have in a year.

Take 15 meds per month?

You have 15 copays.

Of course the majority of my clients have long abandoned the copay for the overall cap on OOP (out of pocket) that comes with the HDHP/HSA.

I would estimate that perhaps 5 - 10% of my client base still cling to copay plans while the rest have become enlightened to the advantages of the "bare bones" approach to health insurance.

Regarding mandated individual health insurance coverage, comes this according to the NCPA:

The imposition of an individual mandate with minimum coverage requirements will likely mean that thousands of people who currently have health insurance will find that their policies do not meet the minimum standards because their deductibles are "too high" for the officials defining the minimum standards, or because their policies lack certain benefits.

These decisions will be made by a regulatory body that has no direct knowledge of the incomes, assets, health status or values of the individual policyholders.

This is what is happening under the failing Massachusetts health reform plan.

From an individual's point of view, a mandate is a tax, says the NCPA:

By forcing people to buy a product they may not want at a price they cannot control, the individual mandate functions as a potentially unlimited tax for health insurance.

People who currently get health care but have no insurance will be required to purchase insurance, thus increasing their costs.

People who are allegedly unable to purchase insurance because it is unaffordable will have to be subsidized to a larger extent than they are at present.

Funding those subsidies will require direct tax increases that will raise costs for all citizens, whether those increases are in the form of taxes on insurance premiums, provider taxes, sales taxes or increases in the income tax.

Late last summer, we reported on a new genetics discrimination bill in Congress. HR 493 was designed to prohibit health plans from adjusting premiums for a group on the basis of genetic information. Along with "Dr No" (Oklahoma Senator Tom Coburn), we dismissed this bill as both redundant and unhelpful.

Alas, word's out that the Senate is likely to pass the bill this afternoon, and it's anticipated that President Bush will sign off on it, as well.

Wednesday, April 23, 2008

I want to thank everyone who left comments at Bob's posts, wishing my family well and offering good thoughts and then condolences. They all meant a lot to me; I was pretty much offline for almost two weeks, and I didn't want anyone to think that these were being ignored. Rather, they were much appreciated.

Julie Ferguson hosts this week's Cav at Workers' Comp Insider. It's an oustanding edition, and all the more impressive because I was unavailable to lend even a small hand. Thank you, Julie, for a great Cav and all the hard work you put into it.

Monday, April 21, 2008

Long-time IB readers know that I have a keen interest in (obsession with?) transparency in health care. That is, I think that pricing and outcomes should more closely follow the McDonald's model than the airlines'. Except for emergency situations, where speed is perhaps the most important criteria, consumers should be able to compare the costs and likely results of procedures and treatments before having to make a decision.

I have mixed feeling about this: on the one hand, it seems to me a good thing that they're taking this effort so seriously. On the other, wouldn't handing out $100 bills affect their own pricing, forcing them to increase costs?

There's no doubting their commitment to transparency itself, though: they even have a page which lists their charges for a variety of procedures, as well as how those charges stack up against the competition.

Aside from price, another aspect of transparency is a sharing of outcomes and satisfaction levels. In this area, too, Alliance Community seems to have fully embraced the concept: on still another page, they provide a "report card" on their level of care.

And as if that weren't enough, the hospital's CEO, Stan Jonas, runs a blog with insights and information. He even has a comments section, which provides a level of executive transparency, as well.

Sunday, April 20, 2008

Several states either have, or want to have, universal health insurance coverage. Now it seems D.C. wants to get in the act.

Bad move.

Residents who already have health coverage and are completely satisfied with it -- but who do not have the kinds of coverage that the legislation stipulates -- would have to change their plans when they come up for renewal.Catania's bill is silent on what that means, but if Massachusetts is any indication, it will end up costing people money.

Apparently the politicians in D.C. aren't any brighter than the ones in Massachusetts.

Before Massachusetts enacted its mandate, it had a little more than 600,000 uninsured residents. Under the new program, about 219,000 previously uninsured residents have signed up for insurance, but nearly all of them receive subsidized coverage. Another 70,000 have been signed up for Medicaid. But fewer than 30,000 unsubsidized residents have signed up as a result of the mandate. Despite the mandate, as many as 300,000 Massachusetts residents remain uninsured.

It gets worse (but then you knew it would).

And while failing to achieve universal coverage, the Massachusetts plan cost taxpayers a great deal. It is now expected to exceed its budget by $150 million to $400 million over the next year, and $2 billion to $4 billion more than was budgeted over the coming decade.

$2+ billion MORE than budgeted. But hey, it's government money, right?

Insurance should be inexpensive for the young and healthy, but the policies Catania recommends, such as guaranteed issue and community rating, make it expensive. The result, in states with such policies -- such as New York and New Jersey, as well as Massachusetts -- has been disastrous, leading young and healthy people to flee the insurance market in droves

I've never given a great deal of thought to angels. It's not a religious thing; it's just that the subject wasn't really on my radar.

Until recently.

These past few weeks have been the most difficult of my life. As one can imagine, blogging (while an important and rewarding part of my life) has not been a priority to me the past several weeks. So I was touched and honored to read, when I did manage to get some "online time," Bob's updates and final tribute. He is indeed a friend, and a mensch.

Oh, that's right, angels; I have recognized quite a few over the past few weeks. Some are unlikely (gruff bearded ones here in Dayton, krusty bearded ones further south). Others were more obvious: the incredibly sensitive and compassionate folks at Hospice of Dayton, about whom I can never say enough good things. Some were physicians: my mother's long-time internist, who loved my mom almost as much as we did; the doctors and nurses at Kettering Medical Center, with whom I shared a rocky start, but grew to trust and appreciate.

Some I've know all my life: friends of my parents for over 50 years. When Uncle Milt and Aunt Honeylou enter the room, it's as if the sun has literally just burst forth. I don't think I've ever known anyone with such a love for life.

My mother's beloved sister, who begged her own mother for a baby sister (and finally got her way), is another one. Even when Mom was in Hospice (maybe especially then), she called every day, asking me to hold the phone to mom's ear so she could tell her baby sister how much she was loved.

My second father is an angel, too: although he's not in perfect health, he would not leave her side in those final days and hours. Sharing her final moments with him was a sacred thing.

My wife is, perhaps, the most likely angel. I always used to tease her that she was Mom's favorite, and there was more than a hint of truth in that. Even though she, too, was hurting and grieving, she was my rock and my anchor, and made absolutely sure that Mom was comfortable and knew that she was surrounded with love.

I suspect some folks are wondering why I'm sharing all of this in such a public forum. It is, after all, personal and painful and seems to have nothing to do with the issues we generally address here. But I was touched by some virtual angels, too: emails of love and support, the comments many have left in Bob's recent posts, all show just how many angels there are among us, even if we can't see them. I am so deeply grateful for all the love, sympathy and support from my "cyber family."

Just knowing that there are so many angels in my life is a perfect blessing.

Saturday, April 19, 2008

Tonight begins the celebration of Passover. I am not Jewish, nor would I presume to attempt to fill Hank's shoes in this annual tradition at InsureBlog.

I am aware of the Passover tradition, but from a Christian perspective. A few things I know about Passover include that this is a celebration of the time the Jews escaped from slavery in to freedom.

In a way, Eileen Sylvia Dennis Stern Keller has experienced her own Passover as she transitioned from this world to the next. I trust these words are received in the manner in which they are put forth, but I was reminded of a poem that was recited by Ronald Reagan following the loss of seven astronauts.

Oh! I have slipped the surly bonds of Earth And danced the skies on laughter-silvered wings; Sunward I’ve climbed, and joined the tumbling mirth of sun-split clouds, — and done a hundred things You have not dreamed of—wheeled and soared and swung High in the sunlit silence. Hov’ring there, I’ve chased the shouting wind along, and flung My eager craft through footless halls of air.... Up, up the long, delirious, burning blue I’ve topped the wind-swept heights with easy grace Where never lark nor even eagle flew— And, while with silent lifting mind I’ve trod The high untrespassed sanctity of space, Put out my hand, and touched the face of God.

Thursday, April 17, 2008

Her spirit departed this earth last night. A text message from Hank arrived this AM when I turned on my phone.

The only thing odd is, Hank does not know how to send a text message.

He must have had help.

I do not know his mom. When I read the text message, I cried. I consider Hank a good friend.

Glorified and sanctified be God's great name throughout the world which He has created according to His will. May He establish His kingdom in your lifetime and during your days, and within the life of the entire House of Israel, speedily and soon; and say, Amen.

May His great name be blessed forever and to all eternity.

Blessed and praised, glorified and exalted, extolled and honored, adored and lauded be the name of the Holy One, blessed be He, beyond all the blessings and hymns, praises and consolations that are ever spoken in the world; and say, Amen.

May there be abundant peace from heaven, and life, for usand for all Israel; and say, Amen.

He who creates peace in His celestial heights, may He create peace for us and for all Israel; and say, Amen.

Tuesday, April 15, 2008

Out of respect for Hank and his family, InsureBlog will be mostly silent for the next few days. I spoke with Hank this morning and he expressed his appreciation that so many readers of IB have reached out to him at this time.

He deeply appreciates the phone calls and emails and would like to thank all who have made contact and prayed for his family.

If you would like to make a public statement, feel free to do so in the comment section at the end.

While we are passionate about our work here at InsureBlog, those issues pale in comparison to what the Stern family is going through at this time.

Tuesday, April 08, 2008

Every year millions of students go away to college. Some continue under their parents health insurance plan. Some (1.7 million) go without, and others buy coverage offered by their university.

Ziqu Liu was one of those students who purchased a health plan through his university. In January he was diagnosed with osteosarcoma.

Right now he is focused on treating the disease.

But his treatment in Columbus carries a steep price. The lowest estimate for the cost of his care, which includes two rounds of chemotherapy treatments and surgery, is $300,000. Even one week in a hospital can cost thousands of dollars, Liu said.

Only one problem.

His student health plan has a $50,000 limit.

Insurance companies offer partial coverage plans because if a plan offered coverage for everything, consumers could not afford it, said Robert Zirkelbach, spokesman for America’s Health Insurance Plan

I'm sorry. That doesn't wash with me.

Liu's plan cost $918 per year; $76 per month.

For $76 Liu could have purchased plans from Anthem, Celtic, Aetna, Medical Mutual or Humana. All of them have lower deductibles and at least $2M in coverage.

“She was pregnant and worked for minimum wage. She went to the hospital, and the hospital told her she needs a hundred dollars up front, which she didn’t have. So they billed her a couple of times for it, and she went back again, she didn’t have a hundred dollars so they refused to see her,”

Sad story.

But . . .

The part about Trina Bechtel’s death is accurate. She died two weeks after her baby was still-born.

But officials at O’Bleness Memorial Hospital in Athens, Ohio, say Bechtel was being treated at an affiliated practice prior to her complications, and she did have insurance

Monday, April 07, 2008

As a member of the National Assocation of Alternative Benefits Counselors, I receive periodic updates on legislation, pending and otherwise, regarding HSA's, HRA's, etc. Mostly, it's routine stuff, and merely confirms information I've already received from other sources.

Today, though, I learned for the first time about a move in Congress to further complicate HSA (Health Savings Account) distribution requirements. Although the email did not mention the name, number or sponsor of the bill (nor, indeed, much of anything else), a quick search of Thomas.gov gave me the information necessary to write an informed post about it.

[PARA REDACTED: Thanks to a tip from a detail-oriented reader, I've been reliably informed (and confirmed) that the bill originally referenced here is NOT ABOUT HSA's, substantiated or otherwise. This makes it even more frustrating, since the NAABC "alert" made no mention of which bill is involved. I'll keep digging, and update as necessary. My apologies to Congressman McNerney. HGS]

Let's take a step back and talk about a detail of HSA's which we don't much discuss here. When one makes a withdrawal (or "distribution") from almost any "qualified" (i.e. tax-favored) account, there are certain rules and requirements. With Health Reimbursement Arrangements (HRA's) and Flexible Spending Accounts (FSA's), one is required to "substantiate" or prove that the expense is eligible for that favorable treatment. This is really a pretty simple hoop through which to jump: the receipt is going to say "allergy med" (so it's okay) or "Snicker's bar" (which is not) [ed: Dang! Are you sure about that?]. Under Section 105 of the Internal Revenue Code, only folks participating in HRA's and FSA's are required to provide that proof; HSA participants are pretty much "on their own." That is, unless and until one is audited.

Until now.

The (as yet unidentified) bill would change that, and require HSA participants to substantiate each of their withdrawals, as well. Is this a big deal? Maybe, maybe not. According to the NAABC email:

"The proposed solution to this undiagnosed problem is to require that expenditures from an HSA be substantiated as a qualified medical expense. This would surely lead to higher administrative costs and more hassles for consumers."

I'm not convinced that that conclusion necessarily obtains. After all, many carriers offer HRA and FSA administration gratis, or for a nominal fee. Admin costs for the HSA loss-funds (the actual "accounts" in "HSA") are already all over the board; as their popularity (and marketshare) continues to grow, more admin's will come into the market, and competition will help to rein in costs. Based on this fact alone, I doubt that substantiation will be much more than a minor nuisance.

UPDATE, NAABC Responds: I sent a link to this post to the NAABC, and Harvey Randecker, its president, sent me this helpful reply:

"My only point in circulating this "Alert" was to indicate exactly how consumer-driven health plans can be destroyed...incrementally.

After The Clinton Reform Plan [ed: "HillaryCare"] was defeated in the early 90's, Bill Clinton was quoted as saying that the lesson they learned was that, in order to get what they wanted, they would need to proceed "incrementally," passing small legislation that will chip away at the system and, gradually, force a more socialized system on the American public.

Now, due to the expansion of HSAs and HRAs, the only way to halt their growth is to make them less desireable to the public. Admittedly, I thought that [the recent Medicare] legislation...made HSA provsions too liberal and that it was bound to incite anti-CDHP legislators, once they assumed control, to do whatever necessary to reverse the trend and, to me, it looks like this is just the first small step.

We are so small staffed at NAABC that all we can do is pass along Alerts like this that we receive that we feel would begin to adversely affect the CDHP market in one way or another. Unfortunately, having a tiny staff means that we really don't have anyone with the time to really digest what we receive. Nevertheless, if we ignored the alarm bells being sent us, we would not be doing a service to our members.

I appreciate your comments."

Thank you, Harvey, we appreciate both your prompt response and your insights. The point about staffing problems is, of course, spot on: it's one of the banes of such associations. It seems to me, however, that this may be one of the key benefits of blogs (such as IB): the ability to do "distributed computing" type analysis on these issues. The appeal of this method would be financial (i.e. free to the organization) as well as comprehensive (i.e. lots of folks working on pieces of the puzzle).

UPDATE 2: I received a phone call from Congressman McNerney's office this afternoon, after I'd already corrected the post. Although I was happy to have given the Congressman free publicity for his bill, I still wanted to know the name and number of the correct bill, since I still couldn't find it at Thomas. So I emailed the NAABC (again) to ask for this information, and their spokescritter had no idea what it was, or any other relevant and important details.

This is outragous: you don't send out an "Alert" about legislation when you don't even know the name or number of the bill. Regardless of the staffing issues, this is just inexcusable. I no longer consider the NAABC as a credible source for legislative information, and won't be troubling our readers with its "Alerts" in the future.

Because claims have been so low, profits have been good, which means that competition (which is, of course, a good thing) is heating up. But when that happens, folks who underwrite the risks have to slash prices to make themselves more attractive, which then cuts into profits.

This is one of those times where I'm truly grateful to work in a side of the biz that understands market forces and the value of customer satsifaction and open communication.

A few years ago, psychologist Sheldon Cohen conducted an experiment. First, he asked adults a key question about their childhoods. Then, he squirted cold viruses up their noses and watched his subjects for several days to see which of them got sick.

As it turned out, the answer the adults gave to that question was "a great predictor" of whether they would develop the sniffles, says Cohen, a professor at Carnegie Mellon University.

This is pretty bizarre.

Did your parents own their home when you were a kid? Actually, Cohen asked that question once for every year from birth to age 18 and found that "the more years your parents owned their own home, the less likely you were to develop a cold,"

Dartmouth researchers say that total Medicare spending in the last two years of life ranges from an average of $93,842 for patients who receive most of their care at U.C.L.A. Medical Center to $53,432 at the Mayo Clinic's main teaching hospital in Rochester, Minn.

and . . .

Differences in the last six months of life were even more striking. Medicare spent an average of $52,911 for U.C.L.A. patients and $28,763 for those who used the Mayo hospital, St. Marys.

Wonder what they will do? Ship you off to a lower cost facility?

"Some chronically ill and dying Americans are receiving too much care -- more than they and their families actually want or benefit from

Too much care.

Are the providers milking the Medicare system? Or is this Medicare's way of rationing?

Then there is this exchange.

Dr. Langberg cited two limits of the Dartmouth study. The researchers focused on patients who died, not those who lived, and they did not have access to laboratory results or other clinical information on patients.

To which a Dartmouth researcher responded,Prof. Elliott S. Fisher of Dartmouth, a co-author of the study, said those observations were correct. But he added: "We are comparing patients with identical outcomes -- all were dead in two years

This week's edition of the venerable Carnival of Personal Finance is now available at MoneyNing. Host David uses the (preferred) Editor's Choice then All the Rest template, with over 100(!) posts to persuse. Have fun!

Sunday, April 06, 2008

Health care and the uninsured is a hot topic. While political candidates are promising the moon, it seems no one is paying attention to the carnage from failed attempts.

For example, consider Maine . . .

In 2003, a majority of both houses of the Maine state legislature passed the nationally heralded Dirigo Health legislation. The Dirigo Health plan is designed to address cost, quality, and access in Maine’s healthcare system and to achieve universal coverage by 2009.

Only one problem.

After four years and nearly $164 million committed to this program, less than 4 percent of Maine’s previously uninsured people have Dirigo coverage.

Four years and $164,000,000 of taxpayer money including $53,000,000 that came from federal taxes levied on you and me.

So what do the legislators in Maine want to do now?

Unbelievably, legislative Democrats want to increase tobacco taxes, including another 50 cents per pack on cigarettes for a cost of more than $28 million a year, to continue throwing good money after bad at the failed Dirigo experiment. Additional taxes include a 1.8 percent tax on health insurance claims paid, which will make health insurance plans more expensive. The taxes on Maine people are too high already and spending another $28 million a year to cover less than 4 percent of Maine’s uninsured people is an indefensible waste of tax dollars and an irrational reason to raise taxes.

Yep. Throw more money at it.

So why did it fail?

Quite a few reasons, but notably, over-regulation.

The insurance "reforms" in the latest Dirigo bill are costly, unproven and unlikely to have a significant impact on premiums for Maine’s small businesses, sole proprietors, and individuals buying insurance outside their employer. This proposal attempts to subsidize Maine’s poor insurance regulations with an uncertain reinsurance scheme while not fundamentally changing Maine’s guaranteed issue regulation. Only four other states — Massachusetts, New York, New Jersey and Vermont — have guaranteed issue laws like Maine’s, and that’s for a reason.

And there is this.

Suppose you are a Maine-iac (just made that up) and you wanted to get in on this subsidized health plan. Well you would go to the Dirigo site and here is what you would find.

"We are not offering subsidized coverage to new members at this time due to lack of funding.

As your elected officials discuss the future of Dirigo in Augusta, it is important that you let them know what you think of the DirigoChoice program. Let your legislator know if this program is working for you."

And to think it only took four years to run a government run health plan into the ground.

Friday, April 04, 2008

Early Retirement blogger Jacob hosts next week's edition of the Cavalcade of Risk. Submissions are due by Monday the 7th, and the Cav will be up and out on the 9th. As always, please make sure to include:

In case you haven't noticed, April 15th is coming up. What did you do last year to cut your tax bill?

Make charitable donations? Suffer a casualty loss? Contribute to a retirement plan?

How about your health insurance and medical bills?

Under current tax law, most people cannot deduct their health insurance premiums and, in most cases, are not allowed a write down for out of pocket medical expenses. But with careful planning you can improve cash flow AND cut your tax bill.

Here is a real life example.

Joe & Mary are looking for health insurance. Joe is 52 and takes medication for HTN (hypertension) and high cholesterol. Mary is 50 and takes HRT (hormone replacement therapy) medication as well as HTN meds.

They are looking for a plan with copays for doctor & Rx and are willing to consider a plan with a $2,500 deductible.

The best plan that fits their criteria is $480 per month before underwriting loads. After adjustments the final premium is $570.

The plan has unlimited doc visits at $35 each, annual wellness exams for $60 and Rx copays. Based on the meds they currently take and figuring 2 doc visits (each) per year (plus the annual wellness benefit) their annual outlay for everything will run $8900.

That's a lot of money.

Even more when you figure they will pay all of that with AFTER TAX dollars.

In a 25% marginal tax bracket ($63,700 taxable income, married filing jointly) they will have to earn $11,867, pay $2,967 in taxes, to have $8,900 left over to pay premiums and out of pocket expenses.

Bill and Sue have an identical situation. They are the same age, have the same ailments, and in the same tax bracket. But Bill and Sue had an advisor (that would be me) that made suggestions on plan design including establishing an HSA to cover out of pocket expenses on a tax favored basis. It was also suggested that they ask their doctor about the possibility of switching their high priced brand name medications for just as effective generic drugs.

The results are remarkable.

Their premium drops from $570 per month to $300 and NO underwriting loads. It is suggested that they deposit the premium savings into their HSA.

This alone will save them $810 in taxes.

Add in the savings on medications by switching to generics and lower priced brand name meds their monthly outlay drops from $742 (premiums + out of pocket) to $586.

The annual cash flow savings is $1,872.

If they have a "normal" year, they will use $600 from their HSA to cover doctor visits and meds. Their HSA deposit totaled $3,240 and will have $2,640 left over that is THEIR money.

Add in the $1,872 in cash flow savings and the difference in the two plans is $4,512.

Now here in the benighted 'States, we'd call that a "two-fer," but the poor woman simply wanted relief from unsightly (and probably uncomfortable) extra skin left after she lost an incredible 224 pounds (Atkins eat your heart out!). The surgeons claimed that adding the implants was the most efficient way to tighten her skin.

Although our primary focus here is insurance [ed: nice of you to notice], we also discuss more general topics, specifically those that are health-related. I'd like to share some personal experiences and observations, partially out of a need for catharsis, but also in keeping with our underlying mission of education and awareness.

Some 18 months ago, we had to move my mother into a nursing home. She'd been diagnosed with Alzheimer's (and yes, I'm aware that the definitive diagnosis actually takes place at the autopsy, but that seemed so, well, final). She's not completely "gone:" I used to talk about her having "good days" and "bad days," but I've matured a bit, and now discuss it in terms of whether she's in her world or ours.

My beloved stepfather is in the same facility, although they're not currently in the same unit; he's in somewhat better shape, and more able to take care of himself.

The reason for this post, at this time, is to share with our readers the very real, very personal, very painful reality of the dilemna that our "seasoned citizens" - and their progeny - face when things begin to go downhill. So I'm going to take some liberties here, and make some observations and suggestions:

If you're one of "the seniors," begin to downsize now. I mean it: DO NOT BURDEN your children with having to clean out your home of the past 30, 40 or 50 years of accumulated junk (and yes, much of it is junk, not treasure: deal with it). It is okay to donate, burn or otherwise dispose of it; if your kids want any of it, offer it to them, conditioned on them actually removing it in the next two weeks.

If you don't already have it (and are able to do so), buy long term care insurance. Contrary to industry propaganda, it is not a method of insuring or conserving your estate. It is to help you retain something far more important: choice. If you don't understand this, then you need to do some serious research. If the agent uses the terms "liquidity" or "estate" (or some variation thereof), find a new agent. I'm serious.

If you're the son or daughter of a senior, encourage them to downsize. Offer to help box things up, drop them off, or otherwise dispose of them. If you have your eye on a particular item (or items), just remember that, far too quickly, your children will face the same daunting task. Make it easier for them than it was for you.

For my compatriots dealing with the declining health of their parents, know that there are people in your life who do care, and want to help. If I've learned nothing else through this experience, it's how many people truly care, and want to help. Perhaps surprisingly, many (most?) of these folks won't be your "family" (that is, brothers, sisters, etc), but others whose lives you've touched. In my faith, we call this "mishpacha" which means "family," but oh so much more. You have that, too, whether you know it or not; ask for help, I guarantee that you'll get far more than you could ever have imagined.

Finally, a personal note: for those praying for me and my family, I am truly indebted, and hope that I can return the favor (when appropriate). Thank you, too, to everyone who's emailed and/or called. You are part of my "mishpacha," too.

Brian Klepper, proprietor of The Health Care Blog, hosts this week's collection of the best of the medwonkosphere [ed: the whatsis?!]. Brian presents almost 2 dozen intriguing, thought-provoking posts, from age-related diseases (heads up to Bob) to virtual office visits.

This is the incredible story of persistence, perserverence and perspicacity on behalf of a client. Your intrepid correspondent endured countless weeks of nail-biting tension, seeking to resolve a seemingly insurmountable set of obstacles.

While insurance certainly isn't rocket surgery, there's a reason why folks must endure many hours of training before becoming licensed, and fulfill continuing education requirements once they're officially "in the biz." And this case is illustrative of the role an agent can play in navigating potentially complicated waters. Obviously, I've changed the names of the insureds, but I'm also holding back the name of the insurer. That may change, but for now we'll just call them Thema.

In early February, I was referred to a family with a dilemna: they were on COBRA continuation which would run out at the end of the month, and the Mrs was pregnant, due mid-month. Further complicating matters was that this rendered the rest of the family uninsurable (until after the baby was born), as well. Don't ask me to explain that, by the way; it just is. So we had a definite and urgent need, and few options.

I sat down and wrote out all the the issues. After about an hour and a half (hey, I'm a little slow), I had my strategy: we would write a HIPAA plan (hang on, I'll explain shortly) for March 1, and simultaneously submit an application for a "regular" major med plan for an April 1 effective date. To my relief and pleasure, the clients are big fans of HSA's, so we chose a high deductible policy for the April 1st plan.

COBRA and HIPAA are two ubiquitous and generally misunderstood federal laws that greatly affect our health insurance choices. Under COBRA, one can keep one's existing group coverage for up to 18 months (and yes, there are exceptions) even if one is no longer part of that group. After 18 months, if one is "uninsurable," one can elect a special "HIPAA Plan:" essentially a mediocre and expensive major medical plan, whose primary benefit is to cover pre-existing conditons. In this case, the HIPAA plan was a life-saver: we could have it in place for March 1, giving us about a month and a half from the due date to the HSA's effective date.

So far, so good.

The rub is that I wanted to submit ALL the paperwork at the same time, using the same carrier. My primary reason for this was the KISS principle. I chose Thema because they had the lowest rate for the HIPAA plan (which is, by definition, standardized as to benefits) and because I like their HSA plan (which has first dollar coverage for most routine preventive benefits). And there's this: I also wanted to have all of this done prior to the baby's arrival. The good news was that the clients had a C-section scheduled, so the date was firm. So, we filled out both sets of paperwork, and sent them off to Thema (along with a cover letter I wrote to explain the extentuating circumstances). Now came the hard part: waiting and hoping.

The HIPAA plan was issued pretty quickly (as we knew it would be; generally speaking, it's something you simply sign up for, with no underwriting). The delays came when trying to get PHI (Private Health Information) from the client. PHI is a byproduct of HIPAA privacy concerns, and requires the carrier to go directly to the insured for answers (rather than through an agent). The problem was that the client was difficult to connect with (understandable, since she'd just had a baby). Complicating things further was the fact that the husband had a health history of his own, with quite a few med's.

As the clock ticked, and we got closer and closer to April 1, I became more and more concerned. It also occurred to me that, since we had submitted the applications before the due date, we'd have to add the new baby to the app while still in underwriting.

On the 25th, the client called to let me know that the Thema folks had called to discuss the PHI, and that she was going to call them back. I said "great, and you can tell them to add the new baby to the policy, as well." Progress!

Wednesday, April 02, 2008

On one hand, corporations & carriers are bound by contract (and sometimes law) to carry out some actions that many consider cruel or heartless.

On the other hand, we have seen situations where these same "villains" are willing to "bend the rules" in order to do what is morally right.

This is one of those situations.

Eight years ago,Debbie Shankwas stocking shelves for the retail giant and signed up for Wal-Mart's health and benefits plan.

After a tractor-trailer slammed into her minivan, the 52-year-old mother of three lost much of her short-term memory and was confined to a wheelchair. She now lives in a nursing home.

Wal-Mart has certainly been on the receiving end of criticism over the years for a number of practices that, some believe, are only to pad their profits. Their health care benefit package is one that has been visited and revisited many times.

Wal-Mart's health care plan lets the retail giant recoup the cost of its expenses if an employee collects damages in a lawsuit. And Wal-Mart set out to do just that after Shank and her husband, Jim, won $1 million after suing the trucking company involved in the wreck. After legal fees, the couple received $417,000.

A carriers right to subrogation is in almost every policy, including health, auto, homeowners and more. Essentially a subrogation clause reimburses a carrier for losses paid that they were not technically liable for.

In this case, they paid medical expenses that were directly the liability of the at fault party (the truck driver in this case). When courts found fault and awarded damages Wal-Mart was perfectly within their right to recoup a portion of the claim dollars paid on behalf of Mrs. Shanks.

Wal-Mart sued the Shanks to recoup $470,000 it paid for her medical care. However, a court ruled that the company could only recoup about $275,000 -- the amount that was left in a trust fund for her care.

One would argue this was a heartless move by Wal-Mart.

But what happens if Wal-Mart fails to exercise their rights to recovery? This could set a precedence for future cases where they did pursue their legal rights.

In other words, to use terms floated around by the press, it would not be FAIR for Wal-Mart to pursue one action while failing to do so in another.

In fairness to Wal-Mart, they reversed their decision to pursue the claim against the Shanks and indicated they would modify their plan to allow "more discretion" in the future.

Wal-Mart did the right thing. They were right in initially pursuing their legal right to collect under subrogation. They did the right thing in allowing the Shanks to keep their award.

Several months ago, we reported on a Texas effort to levy a $5 fee on "adult entertainment venue" clients. The proceeds from this seemingly modest tax was purported to be used to help fund health care for the uninsured (among other things).

FoIB Joe Kristan has good news for champions of free speech (and/or lapdances):

Tuesday, April 01, 2008

In a recent post, Bob wrote about Health Savings Accounts for "seasoned citizens." As a result, we had a delightful and informative discussion about HSA's in the comments section. Kirsten Trusko, senior manager at BearingPoint and I had a virtual conversation about the future of these plans in general, and she provided some fascinating and helpful links for our readers.

We're pleased to share this podcast from Kirsten, in which she discusses the interaction of HSA's and "mergers and acquisitions." One wouldn't ordinarily link the two, but this is an intriguing insight into how the worlds of (high) finance and health insurance intersect.

More than half of U.S. doctors now favor switching to anational health care plan and fewer than a third oppose the idea, according to a survey published on Monday.

National health, as in single payor, as in run by the federal government.

You know, kinda like Medicare.

It’s an annual tradition: Thousands of white-coated physicians from across America descend on Washington for a week of lobbying Congress to fix a serious glitch in theMedicare program that will lead to a sizable cut in their payment rates